What is a MSA - Medical Savings Account?

A Medical Savings Account permits eligible individuals to establish a tax-deferred medical savings accounts (MSAs) to pay medical expenses in conjunction with a high-deduction health plan through a trust or custodial account. On January 1, 1997 a pilot program began that was limited to four years and 750,000 policies under the program. The pilot program must be extended by the IRS/US Treasury Department on a periodic basis.

To be eligible for a MSA, an individual must be either employed by a small employer with 50 or fewer employees that establish a high deductible health plan, or a self-employed person covered by a high deductible health plan.  In 2003 the Health Savings Account (HSA) was created.  Since HSAs are a more widely available and improved version of the MSA, the original program is by and large obsolete.  MSAs are still available, but there are only a few institutions that will open new MSA accounts.  Today, they are called Archer MSAs.